Correlation Between Nordnet One and Franklin Floating

Can any of the company-specific risk be diversified away by investing in both Nordnet One and Franklin Floating at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Nordnet One and Franklin Floating into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nordnet One Balansert and Franklin Floating Rate, you can compare the effects of market volatilities on Nordnet One and Franklin Floating and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Nordnet One with a short position of Franklin Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordnet One and Franklin Floating.

Diversification Opportunities for Nordnet One and Franklin Floating

0.8

Correlation Coefficient

Nordnet One  Franklin Floating

Very poor diversification

The 3 months correlation between Nordnet and Franklin is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Nordnet One Balansert and Franklin Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Floating Rate and Nordnet One is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Nordnet One Balansert are associated (or correlated) with Franklin Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Floating Rate has no effect on the direction of Nordnet One i.e., Nordnet One and Franklin Floating go up and down completely randomly.

Pair Corralation between Nordnet One and Franklin Floating

Assuming the 90 days trading horizon Nordnet One Balansert is expected to under-perform the Franklin Floating. In addition to that, Nordnet One is 2.0 times more volatile than Franklin Floating Rate. It trades about -0.24 of its total potential returns per unit of risk. Franklin Floating Rate is currently generating about 0.0 per unit of volatility. If you would invest  1,852  in Franklin Floating Rate on October 10, 2024 and sell it today you would earn a total of  0.00  from holding Franklin Floating Rate or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	89.47%
Values	Daily Returns

Nordnet One Balansert  vs.  Franklin Floating Rate

Nordnet One Balansert

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nordnet One Balansert are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively invariable basic indicators, Nordnet One is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Franklin Floating Rate

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Floating Rate are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong fundamental indicators, Franklin Floating is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nordnet One and Franklin Floating

The main advantage of trading using opposite Nordnet One and Franklin Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordnet One position performs unexpectedly, Franklin Floating can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Franklin Floating will offset losses from the drop in Franklin Floating's long position.

The idea behind Nordnet One Balansert and Franklin Floating Rate pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.